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Matt Moore has been in the partner marketing world since 2012, beginning in affiliate compliance before moving to product marketing. As the product marketer for Radius, by Impact, he keeps one eye on the engineering slack channels and the other on partner marketing trends and the broader digital marketing landscape. His primary passion at Impact is effective and entertaining product messaging. If you catch him watching panda GIFs at his desk, don't worry -- he's just collecting material for some upcoming release notes.

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The rise of social media has brought about new ways of buying media, but there are still persistent questions about the ROI of influencer marketing. Matt Moore, Associate Product Manager, Impact explains how building performance-marketing deals benefit both brands and influencer partners

CONTENT THAT CONNECTS: WHY INFLUENCER MARKETING IS THE FUTURE OF GEN Z ENGAGEMENT

Gen Z is a business opportunity you can’t afford to miss. As 40% of the population commanding upwards of $40 billion in spending power, modern marketers need to build compelling strategies to engage with Gen Z.

The rise of social media has opened the door not only to more ad impressions but also to marketing partnerships with individuals who have cultivated large followings. These partnerships, known as influencer marketing, are primed to grow, with 70% of agencies and brand marketers anticipating budget increases this year, according to eMarketer.

While these influencers can provide credibility and exposure, it’s not always easy to prove their ROI. Most influencer marketing programs use vanity metrics, such as likes, comments, and shares, in an attempt to measure success. As influencer marketing grows in importance, marketers need to change their mindset and build performance-based deals with their influencer partners.

Influencer marketing involves any individual who provides access to a sizable audience and can leverage it to positively reinforce a brand or a purchase decision. While the practice has existed for several years, the traditional blogger influencer has transitioned to Instagram, Twitter, Pinterest, and YouTube. New York magazine’s recent look at fashion influencers shows the power that widely followed individuals can wield.

The most common model has influencers being paid on a per-post basis. Those with at least 100,000 followers were charging an average of $2,000 per promotional tweet in 2016, while influencers with 1 million followers could earn $20,000, according to The New York Times. The trouble is that there is no correlation between the widely-used vanity metrics and actual sales. It’s easy enough to get engagement on a post, but that doesn’t always translate to engagement on the brand page or to sale volume. Even if a brand sees a swell in traffic to their site, it’s difficult to attribute it to an influencer marketing campaign if the brand isn’t properly tracking traffic. For all they know, a traffic surge may be the result of print advertising or another digital campaign. If a brand is only looking at vanity metrics, they lack a clear view of ROI.

Fortunately, most brands already operate a channel with a built-in focus on ROI and all the requisite technology to track it: performance marketing. By taking their cue from the performance marketing channel, or even by folding influencers into it, marketers can continue to invest in their influencer programs while guaranteeing that payouts are in line with an actual value generated. Plus, they avoid the ever-present danger of fraud -- it’s easy enough to artificially inflate follower counts and engagement metrics, but not so easy to fake sales.

Now, this is not to say that every influencer can or should be paid on performance. For instance, it may be tough to convince Kim Kardashian, with her 109 million followers, to move away from a payment model that nets her massive payouts with no accountability for driving sales. That sort of celebrity influencer relationship will likely stick with the status quo for some time.

But things change when you move down the scale of influence. Social media accounts with 20,000 followers may operate on a per-post basis right now, but there’s a high likelihood a marketer can negotiate payments on a performance basis instead. This ultimately comes down to how much compensation the influencer will receive, and there’s lots of flexibility here. The brand can offer 10% of all sales, or 10% of the first 100 orders with a lower percentage for everything after that, or even a hybrid fixed rate plus percent-of-sale payout.

Since most brands are used to collaborating closely with influencers, successfully executing this strategy requires little extra effort. Once the influencer has joined whichever platform the brand uses to track performance, they just need to use a specific link in their content. Once they create their post, they will receive credit for any followers who click through and make a purchase. In short, if the post drove a sale, the influencer gets credited.

Of course, performance marketers know that consumers can move slowly through the purchase funnel, and exposure to a product through an influencer may come very early in that process. Another partner, such as a coupon site or a loyalty program, may get the final interaction with the consumer prior to purchase. In this case, it makes sense to give the influencer a participation bonus, to ensure that they are rewarded for all interactions that led to a sale, even if another partner swoops in to claim the last click. This guarantees that influencers receive compensation for all of the value they provide.

This is clearly a benefit for the marketer, but there is an incentive for the influencer as well. Armed with a data set around how well their account performs, and the past behavior of their followers, the influencer gains a very clear understanding of what they are worth. Rather than use soft metrics such as “likes,” the influencer can show conversion stats that prove they’ve driven sales for brands. The better the performance, the more leverage the influencer has in future negotiations. With metrics that prove performance, these social media mavens have a tool that reinforces and confirms their level of influence.

None of this is to say that there is a rulebook on influencer marketing that must be followed step-by-step. But as consumers become more avoidant of typical banner ads, influencer marketing will continue to grow in importance. Marketers must, therefore, be fluid and craft plans that yield the best ROI. For many brands that may soon look like negotiating flat rates for their largest influencers, and moving the low and mid-tier influencers to a performance model.

What’s most important is for marketers to build contracts with influencers around true performance metrics, and not the likes, comments, shares, and other vanity stats associated with social media. In doing so, brands will gain a better understanding of how their influencer marketing is helping them reach their goals, while the influencers themselves will gain a better understanding of their worth.

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